PLEASE PROVIDE THE SOLUTIOND FOR THE CORRECT ANSWERS
In 20x1, BUCOLIC RURAL Co. acquired land for a total cost of ₱40,000,000 to be used to quarry
marble, limestone, and construction aggregates. Costs incurred to obtain legal right to explore the
property amounted to ₱8,000,000. Expenditures incurred in the exploration for and evaluation of
mineral resources before technical feasibility and commercial viability of extracting a mineral
resource are demonstrable totaled ₱12,000,000. Intangible development costs of drilling, tunnels,
shafts, and wells before the actual production totaled ₱20,000,000. BUCOLIC Co. estimates that total
recoverable reserves are 100,000,000 units. Furthermore, BUCOLIC Co. expects to sell the land for
₱4,800,000 after resource is depleted. However, no buyer will pay this price unless the mine is
drained, filled and leveled, a process that will cost ₱800,000. It is BUCOLIC’s policy to capitalize all
exploration costs.
Actual units quarried in 20x1 through 20x4 totaled 30,000,000 units. On January 1, 20x5, BUCOLIC Co.
estimated that the remaining recoverable reserves are only 25,000,000 units and after the reserves
are exhausted, the land will be sold for ₱3,200,000. Costs of disposal are estimated at ₱1,200,000.
Actual units quarried in 20x5 totaled 6,000,000 units.
5. How much is the depletion charge in 20x5?
a. 13,284,000 b. 13,480,000 c. 13,280,000 d. 13,248,000
6. What is the carrying amount of the wasting asset on December 31, 20x5?
a. 43,852,000 b. 44,272,000 c. 42,720,00 d. 43,952,000